McClelland Minute - April 12, 2009

Patience is a Virtue; I Wish I Had It

As I write this column, I have just completed the Easter weekend negotiating offers on two houses for which I represent the vendors.  It’s been a frustrating couple of days for everybody concerned.  Buyers feel in charge, and they are flexing their muscles.  In a way I guess it is payback for those four or so years when demand exceeded supply, and there usually wasn’t much room for discussion.  If you didn’t buy it, someone else would.

With spring, the local market has opened up again, led by first time home buyers taking advantage of low interest rates and good inventory.  As they pick off those decent, affordable homes now available, the owners of those properties are finally getting the chance to trade up. 

We are also seeing a healthy trade of commercial and industrial real estate which I feel is a really good sign that small and medium sized business believe in the future of the area.  What surprises me is the healthy amount of interest in bare land acreages.  Some clients I have talked to say that availability of contractors is a prime factor.

The low hanging fruit will go first.  What I mean by this is there are situations in which vendors have a compelling reason to sell, or have an employer who will guarantee proceeds in order to get their employee to the community where they are needed in a timely manner.  When that limited supply is gone, normal market valuation will kick in, which for single family homes means the actual sales of comparable properties.

There are two things that annoy me today.  The first is the prevalent attitude amongst buyers that they can pluck an initial offer out of the air, often tens of thousands below what is already a substantially sharpened ask price, and expect it to be accepted with little or no negotiation.  The second is vendors who ignore the realities of the current market and want to price it ignoring the facts.  That time has gone; get over it.

I believe the housing market within the region is going to recover quicker than people think, bringing with it a certain amount of stability, especially with quality product.  Price, condition, location, and presentation still rule.

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